Investors differed, and the shares sank during Johnson’s
90-minute presentation. It was a signal that his plan fell short
of the excitement that has followed Johnson since he became
chief executive officer in June after turning Apple Inc. (AAPL) stores
into the world’s most successful retail operation.

Johnson’s strategy for the fourth-largest U.S. department
store chain -- including fewer promotions, boutiques-within-a-
store and hiring talk-show host Ellen Degeneres as a spokeswoman
-- wasn’t the revolution many expected, said Liz Dunn, senior
consumer analyst at Macquarie Capital in New York.

“The plan isn’t necessarily ground-breaking,” Dunn said
in a telephone interview. “Anyone with a mind could have
assessed that there needed to be a change to the stores, pricing
strategy and marketing.”

The 52-year-old J.C. Penney CEO says he plans to use his
experience at Apple stores to jump-start a retailer that has
posted sales declines for the past two quarters. The 1,100-store
chain cut its fourth-quarter profit forecast earlier this month,
citing lower-than-expected sales and additional markdowns.

The entire sector is struggling. Department stores are
expected to lose market share this year and generate sales
growth of 1.7 percent, compared with a projected 3.4 percent
gain for retail as a whole, according to Bloomberg Industries.

Investor Euphoria

On June 14, the day Johnson was named CEO, J.C. Penney
shares surged 17 percent, the biggest gain in a decade. As of
yesterday they had risen 14 percent to $34.27 since his arrival,
triple the Standard & Poor’s Index gain over the same period.

Investor euphoria reflected Johnson’s record at Target
Corp. and Apple. During 15 years as a merchandising executive at
Target, Johnson brought in designers like Michael Graves and
helped invent cheap chic. The strategy transformed the
Minneapolis-based discounter into a nationwide destination for
accessible fashion. Many retailers copied Johnson’s moves.

The late Steve Jobs hired Johnson in 2000 to create Apple
stores. At the time, skeptics abounded, including Wall Street
analysts. Yet the minimalist stores with their Genius Bars and
speedy checkouts became a phenomenon and a model that has been
copied widely, from Best Buy Co. (BBY) to Staples Inc. (SPLS) Apple stores
generate about $7,000 in sales per square foot, about 35 times
as much as a department store, Johnson said yesterday during the
presentation.

Why Leave Apple

“I have been asked so many times in the last eight months,
‘What we were you thinking? Why would you leave what’s now the
most valued company in the world and come to J.C. Penney?’”
Johnson said yesterday in Manhattan. “Some think this decision
is counterintuitive. I feel like this is the exact time at J.C.
Penney when I joined Apple.”

Johnson’s turnaround plan, scheduled to be complete by the
end of 2015, borrows from his Target and Apple playbook. One
theme: making shopping simpler. Johnson complained yesterday
that Plano, Texas-based J.C. Penney's stores had too many items and sales
events.

The chain has 400 brands and plans eventually to reduce
that to 100, each with its own store-in-store.

J.C. Penney also will eliminate such events as Fourth of
July sales, which totaled about 600 last year, and create lower
opening price points. For example, a t-shirt with an initial
price of $14 typically ended on sale for about $6, Johnson said.
As of Feb. 1, that shirt will be offered for $7 from the get-go.

Triple Sales

The company will advertise monthly sales around a theme,
such as all back-to-school items reduced in August. The goal is
to increase store visits per customer from about four a year to
once a month, and that could triple sales, Johnson said.

The chain will also change its store layout to emulate
Apple. At Apple stores, there is an area dedicated to products
and one focused on owners of those products that offer services,
such as the Genius Bar.

J.C. Penney will follow suit by throwing out a department
store signature: the jewelry and cosmetics counters at the
center of the first floor. Instead, the stores will feature what
Johnson called a “town square” offering entertainment and
services not directly related to moving merchandise.

Taking a page from Target, Johnson plans to give the J.C.
Penney brand a quirkier sense of humor. That’s where DeGeneres
comes in. The chain plans to add more exclusive fashion brands,
including a line from Nanette Lepore. It’s no coincidence that
Michael Francis, the former chief marketing officer of Target,
is Johnson’s new merchandising and marketing chief.

Apple Legacy

While some analysts talk up Johnson’s Apple legacy,
translating elements of the strategy he used there to a middle-
market department store won’t be easy, said Pam Goodfellow, an
analyst at Worthington, Ohio-based BIGresearch.

“Apple’s success was part of J.C. Penney’s logic for
hiring him,” she said. “But it’s hard to compare those
stores.”

Apple is a cult brand with such game-changing products as
the iPhone and iPad. J.C. Penney is a department store that
caters to middle-class shoppers weighed down by stagnant wages
and high unemployment, Goodfellow said.

“Maybe you can pique peoples’ interest and get them in the
store, but we’re not seeing big wallets right now,” she said.
“It’s not like we’ll have consumers full of optimism and
happiness and they’re suddenly looking to spend more.”

No one says turning around J.C. Penney “will be easy,”
Francis said in an interview yesterday.

“But we also have to remember that for half of America,
this is still a brand that they admire, respect, visit and have
an affinity for,” he said. “So we’re not starting at zero.
What we’re doing is really taking the tarnish off the brass, if
you will.”